Follow-up calls with an investor

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📰 Today's Edition

Getting a follow-up call with an investor is a big deal.

It doesn’t necessarily mean they want to invest, but things are starting to get serious.

Most likely the investor has some knowledge about this market, the problem set, and/or your target demographic. They could also be interested in you as a founder.

But since they haven’t yet committed, they still have some reservations. It’s your job in this second call to address their concerns and align on what’s needed for your business to succeed.

So… how do you do that?

First, anticipate their questions. Second, acknowledge the risks (and your plan to address them). And third, begin to build a foundation of trust.

Ready? Let’s dive in.

Think about these 5 pillars

Step one is anticipating all the things the investor might have reservations about. So let’s think through the 5 pillars that most early-stage investors care about.

1. Product Viability

Investors need to believe that your product isn't just a great idea, but a functional solution to a big problem. Be prepared to:

• Discuss or show how your product works in practice

• Show evidence that the problem you're addressing exists

• Provide feedback from early users

2. Market Demand

A brilliant product means little without a willing market. Show investors that there's appetite for your solution. Be prepared with:

• Market research indicating customer willingness to pay

• Pricing strategy that supports a quick payback period

• Revenue and retention numbers, if you have any. Remember, anything better than $0 is big news at the early stage.

3. Customer Acquisition Strategy

Customer acquisition costs are a big concern for investors. Be prepared to talk about:

• The customer acquisition channels you’ve tried (and results from each)

• The unit economics of the biz

• Cost per acquisition and lifetime value projections

• How you’re thinking about scaling your user base

4. Competitive Advantage

Look. There are probably dozens of companies trying to do what you’re doing. Your “reason to win” is crucial. Be prepared to discuss:

• What makes your solution different

• Barriers to entry for potential copycats

5. Team Capability

Investors need confidence that you are the team to win this market. Highlight:

• Your team’s relevant experience and skills

• Your unique insights from customer discovery or personal experience

• How you’re thinking about growing your team (quickly, slowly, using contractors..?)

Addressing the risks

Remember, investors who have been watching (and perhaps investing in) this space have probably seen this problem tackled in different ways.

So they likely have some sense of the challenges other companies in the industry have faced.

Use this call to address the risks facing your industry and your business transparently and confidently. You aren’t expected to see the future, but you should come prepared with a well-thought-out plan for how to address the challenges you’re likely to face.

Investors want to see that you’ve thought about the risks and have plans to address those risks as your business evolves.

Building Trust

Your relationship with your investors will likely last years, if not decades. Show the investor that you’re someone worth doing business with by building a foundation of trust from the very beginning.

• Be open about challenges (not just successes)

• Demonstrate that you’ll keep lines of communication open… even when times are tough

• Have examples about how you've acted on feedback

Remember, while there may be a perceived power dynamic between investors and founders, your goals are ultimately aligned. Investors succeed only if you do.

You got this

No one expects you to see the future. And no one expects you to have insane traction at this stage.

They do expect that you come prepared (know your metrics, please), know your market inside and out, and have a well-thought-out plan for the future… while acknowledging that things could change in a heartbeat 🤷‍♀️.

Avoid overly optimistic claims – those will just raise suspicions. Instead, offer a balanced, clear-eyed view of your business that instills confidence.

You got this!

Memorizing my metrics,

Kera from Hustle Fund

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